Trojan Free Trade

Sep 25, 2013

With the recent change of government, there is likely to be a change in
attitude to some slightly arcane Free Trade Treaty regulations. One such
regulation that the Howard, Rudd and Gillard governements all seemed to agree
on is that including a Investor State Dispute Settlement (ISDS) regulation wasn’t
always in the best interests of Australia. The Abbott government doesn’t seem
to hold the same
opinion.

The ISDS provides a mechanism for companies to seek compensation from a country
where they feel they were penalised due to the laws of that country. How is
that a bad thing? Well, take the case of Phillip Morris, the tobacco company
that lost it’s case in the High Court of Australia. They argued that the
Gillard government’s crackdown on cigarette packaging was unconstitutional
because it infringed their right to trade. The High Court felt otherwise and
ruled in favour of the government.

The highest court in a country rules against you, so you should suck it up and
leave it be, right? Well, not if there’s a 24 year old free trade agreement
that includes an ISDS provision.

Less publicised is the fact that having failed in the High Court, the company
now is pursuing the matter via a bilateral trade agreement signed between
Australia and Hong Kong in the early 1990s, which includes ISDS provisions.

The contempt such an action shows for Australian legal process and sovereignty,
says Patricia Ranald, is plain.

“They’re saying: ‘We’re going to ignore the High Court, when it says we’re not
entitled to compensation; we’re going to go off and find an obscure trade
agreement to sue you under’.”

Australia is about to become a member of one of the largest free trade regions
in the world, the Trans Pacific Partnership
Agreement. The US is pressuring
Australia to agree to the ISDS provisions, which would allow, say, a coal-seam
gas mining company to sue the government if our environmental regulations
prohibit them from operating in Australia.